For too long, the interaction between funders and grantees has been reduced to little more than a transactional exchange. Money flows one way, deliverables flow the other, and timelines are drawn with unyielding rigidity. This outdated model is increasingly being challenged. Community based organizations (CBOs) and South-based NGOs are pushing for a paradigm shift towards a more holistic approach — one that embraces non-monetary support and, crucially, flexible, unrestricted funding. (Some examples include #ShiftThePower and the RINGO Project). In this four-part blog, jointly authored by the people at Solidarity Foundation, we dive into insights from our study carried out in 2024, “Resourcing Social Movements: How Do We Shift the Power?” to tackle these complex issues.
In the corridors of social justice and community empowerment, the battle isn’t just against societal ills; it’s also against a relentless tide of bureaucracy, inflexible funding, and draconian regulations. For Community-Based Organizations (CBOs) and Community Foundations in India, the challenges they face are not merely administrative—they are existential.
Many governments acknowledge the valuable role NGOs play in delivering services. However, while they welcome this contribution, some governments also perceive NGOs as a threat, particularly because these organizations work to create a more informed and empowered citizenry. As a result, governments have deployed various administrative measures to create barriers to entry, restrict access to funding, and limit advocacy efforts by NGOs. In response, funders have either packed their bags and fled, or struggled to operate in challenging environments with stricter compliance requirements on NGOs. However, the pressures don’t only stem from regulatory systems. Donors, along with their boards, often believe that tougher demands will lead to better governance and transparency. Unfortunately, these demands can become overwhelming for many NGOs and CBOs, making it increasingly difficult for them to meet the expectations placed on them.
The Tyranny of Templates and Timelines
In the quest for funding, CBOs are forced into a labyrinth of tedious applications and rigid reporting templates that rarely align with the realities on the ground. Funders, many of whom demand quick, scalable results, fail to appreciate that meaningful social change is a marathon, not a sprint. One community foundation noted that “many of them (funders) are very tech-driven and are looking for very quick scalable things that they can do.” This tech-centric approach clashes with the slow, nuanced work of rights-based advocacy, leaving organizations in a frustrating bind. The messy, nonlinear process of social change presents a challenge when explaining the work to funders who expect things to proceed with clockwork precision.
The burdensome reporting requirements, often in English, further alienate local organizations. The insistence on extensive, monthly reports, without considering the co-creation of metrics with grantees, underscores a disconnect. “They think we are business houses with all those crazy tables they give us to fill up,” lamented one CBO representative. The lack of feedback on rejected applications only adds insult to injury, compounding the sense of futility and disillusionment among civil society actors.
A Disjointed Symphony: The Fragmented Funding Landscape
The funding ecosystem is marred by a lack of coordination and the narrow focus of most funders. Organizations are often forced to contort themselves to fit the varied and sometimes conflicting criteria of different funders. This fragmented approach not only strains the resources of CBOs but also stifles innovation and collaboration. As one participant put it, “there is a tendency to see things in a very myopic manner like this is what I am funding and I am only interested in that.” The instability in funding, particularly when funders abruptly withdraw support or refuse to adapt to changing needs, leaves organizations scrambling. The resulting financial insecurity can derail long-term projects while eroding the trust and continuity necessary for effective community engagement.
Strangling Civil Society: The Regulatory Noose Tightens
Recent changes in India’s regulatory landscape have cast a long shadow over civil society. The Foreign Contribution (Regulation) Act (FCRA) amendments have introduced stringent measures that make it increasingly difficult for organizations to secure and utilise foreign funding. The prohibition on sub-granting, combined with a cap on administrative expenses, has weakened networks and stifled the operational capacity of many organizations. One CBO leader voiced a common fear: “Only certain organizations are able to function freely.” This chilling sentiment reflects a growing concern about the pressure to align with set agendas to secure funding.
The revised Corporate Social Responsibility (CSR) rules have further tightened the financial constraints. The mandate to spend 100% of CSR funds within the same financial year, without carrying forward unspent funds, forces organizations into a precarious financial juggling act. The heightened compliance requirements drain precious time and resources, diverting attention from the crucial work of serving communities. Navigating these regulatory demands is both costly and time-consuming, yet budgetary allocations for these are scarce. NGOs and CBOs are rarely afforded the time needed to ensure they are compliant. “We need to first write a proposal and raise money so that we can write proposals to raise money” one respondent remarked.
The mandate to spend 100% of CSR funds within the same financial year, without carrying forward unspent funds, forces organizations into a precarious financial juggling act.
Besides the regulatory demands, there is also the mining of data that is hugely worrisome. Concerns looms over data issues, compounded by the high costs and the arduous task of gathering endless streams of data. The collection of data by different funders from NGOs organization, especially those working with marginalized and stigmatized groups, raises alarms about the potential misuse of sensitive information. The fear is palpable: “data is the new oil and everybody is after it, but we obviously cannot compromise communities.” The potential for surveillance and the targeting of vulnerable communities by state and non-state actors casts a shadow over the trust and safety essential to civil society work.
The Fight for Survival
For civil society in India, the path forward is fraught with obstacles. The challenges of inflexible funding, burdensome reporting, fragmented support, and draconian regulations threaten the very existence of organizations dedicated to social justice and community empowerment. As these organizations struggle to keep their heads above water, the question remains: Will funders and regulators recognize the value of a vibrant, independent civil society, or will they continue to tighten the noose, leaving these vital voices silenced and powerless? The answer lies not just in the actions of those in power, but in the collective will of the public to demand a system that truly supports those working for a better world.
Follow the links below to read the other blogs in this series from the Solidarity Foundation.
Part 1: Did the pandemic prompt a rethinking of funder-grantee dynamics?
Part 2: From transaction to transformation: A possible path for funder-grantee relationships